Since October 2012, the Fee for Intervention (FFI) scheme has given the Health and Safety Executive (HSE) a statutory power to recover its costs from those found to be in material breach of health and safety law. The HSE may recover its costs simply by serving notice of contravention followed by an invoice on the company in question. If a company disagrees with the invoice, it may dispute it. Controversially, the process for disputing the invoice involves appealing to the HSE itself – not exactly an independent tribunal!
Businesses responding to an FFI face a difficult dilemma. On the one hand, paying a relatively small amount charged by the HSE may seem a relatively cost-effective way to deal with a compliance issue, especially when compared to the cost and uncertainty of appealing against an invoice.
On the other hand, companies are rightly reluctant to pay an invoice where they disagree with the HSE officer's opinion that they were in material breach. In such circumstances payment seems like an admission of liability.
This article takes a closer look at the implications of paying an FFI and, in doing so, suggests that a more robust response to the regulator is often warranted.
The FFI Scheme
The FFI scheme was introduced by the Health and Safety (Fees) Regulations 2012. Under the scheme, businesses found to be in "material breach" of health and safety laws can be made to pay the HSE's costs reasonably incurred during regulatory intervention.
A "material breach" occurs when a business breaches health and safety laws and, in the opinion of a HSE inspector, the breach is sufficiently serious to notify that business in writing. The inspector will notify the business by notice of contravention, an improvement or prohibition notice or a prosecution. The HSE calculates the fee by multiplying the hourly rate, which is currently £124, by the time the HSE takes to identify and conclude its regulatory action.
The purpose of the FFI scheme is to shift some of the cost of health and safety regulation from the public purse to businesses in breach of health and safety law. To this end, the FFI scheme has been effective. From October 2012 to March 2014, the HSE invoiced over £12m in fees, including over £500 000 to the waste sector alone.
Implications Of Paying
Whilst individual invoices may not be commercially significant for the larger operators, they can be material for smaller companies.
But regardless of the amount of the fee demanded, there are important potential legal and commercial ramifications involved in paying a fee for intervention, which are not captured in the headline figure.
For example, there is a concern that in paying an FFI invoice, a company is by implication admitting that it was in material breach of health and safety law. This could have unintended legal consequences. For instance, a prosecuting authority may, in coming to a decision on whether to prosecute a company, use past FFI payments as evidence of a history of repeated non-compliance, even though the company did not in fact admit or agree that it had breached the law.
Or, if an employee brings a civil claim against the company in relation to a safety matter, the employee could refer to the payment of FFI invoices as evidence of poor health and safety performance. If a company is convicted of a health and safety offence, its history of FFI payments could be used by the prosecution to discredit any attempt by the defendant to argue that, prior to the incident for which it was convicted, it had a good health and safety compliance record. In other words, paying an FFI could aggravate a fine for a future offence.
More generally, businesses face ever growing commercial and public pressure over health and safety performance. Because of this, payment of fees for intervention could have wider implications. For example, operators are frequently asked in tender submissions for details of regulatory enforcement action, and FFI invoices may need to be disclosed in this context.
Also, although there is currently no public register of FFI payments, information on fees paid could enter the public domain if a member of the public made a request under the Freedom of Information Act. Once in the public domain, such information could be used by third parties to misrepresent the facts.
Appealing The FFI
If a company believes that it was not in material breach, or the invoice is excessive, it can dispute the FFI to the HSE. In these circumstances, the company must write to the HSE, querying the invoice within 21 days of the invoice date. If the company is not satisfied by the HSE's response, it can write to the HSE formally disputing the invoice. This will be considered by a panel of HSE staff and an independent representative. If the dispute is not upheld, the company remains liable for the original invoice plus the additional costs of handling the dispute.
Many stakeholders have complained about this procedure, arguing that it is against the principles of justice for the HSE to act as police, prosecutor, judge and jury. The first triennial review of the HSE reiterated these concerns. However, the HSE is, of course, required as a matter of public law to handle all disputes fairly and reasonably. We know from successful appeals we have handled that the appeal route can be effective.
Indeed, where a company disagrees that it has committed a material breach of health and safety legislation, we would suggest that disputing an FFI will often be – despite the additional costs risks – a sensible step to protect the company against potentially damaging commercial consequences.
Sam and Anna would like to thank Tom Hanson for his assistance in preparing this article.
This article was first published in the July 2014 edition of CIWM magazine.